Appeals from judgment of Court of Common Pleas, Civil Division, of Allegheny County, Jan. T., 1967, No. 2089, in the matter of condemnation by Urban Redevelopment Authority of Pittsburgh of certain land in the twenty-first ward of the City of Pittsburgh.
Frank W. Ittel, with him Blair S. McMillin, and Reed, Smith, Shaw & McClay, for condemnee.
Richard W. Kelly, with him Richards & Kelly, for condemnor.
Bell, C. J., Cohen, Eagen, O'Brien, Roberts and Pomeroy, JJ. Opinion by Mr. Justice Pomeroy. Mr. Justice Jones took no part in the consideration or decision of this case.
In this case the Urban Redevelopment Authority of Pittsburgh (the Authority) condemned two leasehold interests of Pittsburgh Outdoor Advertising Corporation (Outdoor) in a building, the fee of which had already been acquired by the Authority by purchase from the owner. The problem presented on this appeal is the proper method of valuing these leasehold interests, that is, Outdoor's right to remain in undisturbed possession of the premises for the remainder of the term of the lease. It is the loss of this right for which compensation is payable to the condemnee.*fn1
Each lease was for a term of five years commencing July 1, 1965 and ending on July 1, 1970. One lease provided for the leasing of a portion of the roof of the building to Outdoor for the erection of four billboards 12' x 25' in size, for an annual rental of $250. The other lease provided for the leasing of a portion of the west wall of the building to Outdoor for the erection of one billboard of the same size for an annual rental of $50. At the time of condemnation the leases had some 3 years and 7 months to run.
After a hearing following the condemnation the Board of Viewers awarded $12,000 to Outdoor. Both sides appealed from the Viewers' award and, by consent of both parties, the case was tried non-jury by the court below. That court rendered an award in favor of Outdoor in the amount of $16,800. Both parties excepted to the award, the court en banc adopted the opinion of the trial court and dismissed the exceptions, and judgment was entered for Outdoor in accordance with the trial court's award; both parties have appealed.
The evidence showed that Outdoor realized considerable income from the placement of advertising on its billboards which it had erected on the leased premises, and there was opinion evidence as to whether this income should properly be considered, in whole or in part, as "rent" received by Outdoor from its customers, or as income from the business conducted by Outdoor. Under Section 705(2) (iii) of the Eminent Domain Code, Act of June 22, 1964, Spec. Sess., P. L. 84, 26 P.S. 1-705, expert valuation testimony may include capitalization of net rental value or reasonable net rental value of the condemned property, but not capitalization of the income or profits attributable to any business conducted on the property. The principal dispute in this case has centered on the proper differentiation of these factors as applied to the facts of this case. The learned court below, while correctly concluding that the income from Outdoor's advertising customers should not be considered as rent, nevertheless was of the opinion that it was a legitimate factor to be considered in arriving at the fair market value of the leasehold, and therefore refused to strike Outdoor's testimony relative to income. In this respect the court was in error.
The problem of rental versus business income of a lessor of condemned property as it relates to the permissible scope of expert testimony under the Code is important and relevant in the valuation of a condemned
in the fair rental value of the premises. Thus, at least in theory and hopefully in practice, Outdoor could obtain a lease of a comparable location for the same amount of rent, construct its billboards at that location with the award for the replacement value of the billboards and realize an identical income flow. Other than the loss of the billboards themselves, Outdoor has not been legally damaged by this taking. Because the opinion of the court below indicates that the amount of its order and judgment was based at least in part on the testimony as ...